Pharma could provide the antidote to suffering investments during COVID-19 crisis

Aside from health and protecting the population from a new pandemic, much of the talk surrounding COVID-19 has focused on business.

As the backbone of any economy, businesses and their recovery are almost as important as keeping people healthy. The outlook in some sectors, particularly retail, might be concerning. However, there are some areas where businesses are not only thriving but will continue to do so in the coming months and years.

Digital technology companies have held strong during COVID-19 lockdowns. Platforms such as Amazon and Netflix attracted record numbers between March and August 2020. However, the best long-term business bet right now, according to hedge fund managers, is pharma. Any company that can create a safe vaccine for COVID-19 will clearly prosper. However, there’s an entire industry that will benefit from a new health-conscious global community.

Hedge Fund Managers See Potential in Pharma

In reviewing the current state of business investments, 73% of hedge fund managers surveyed by IG Prime believe pharma stocks will see the greatest increase over the next 12 months. Any COVID-19 vaccine will have to be refined and recalibrated in order to keep pace with an ever-changing virus. This alone will keep big pharma companies busy. However, IG Prime’s 2020 Hedge Fund Trends report also notes the importance of supplements, manufacturers of general medicines and, in a broader context, companies that focus on fitness and wellbeing.

What is, perhaps, most interesting in terms of business and investments is the interplay between digital technology and pharma. 66% of hedge fund managers believe digital tech stocks will increase in value over the next year. The advent of contact tracing apps and those designed to alert people about COVID-19 risks could be the star performers in the long-term. Indeed, as well as combining two industries with potential, these innovations are backed by the government and may, in time, become mandatory. In lieu of that, the race is on to find a vaccine.

Gilead Sciences, a US company that already has treatments for HIV, moved into Phase-3 of vaccine testing for COVID-19 in September 2020. In addition to Gilead Sciences, familiar names in the sector such as Pfizer are working to create a vaccine for COVID-19. Beyond treatments, Germany’s Merck KGaA is active in all areas of pharma, including food safety. With prevention as much of a focus as a cure, finding new ways to keep our food safe could also play into the current narrative. Along similar lines, investors have also been sizing up fitness companies such as Fitbit and Garmin.

A Legacy of Health Will Shape Businesses in the Long-Term

COVID-19 will leave a legacy long after we consider it to be no longer a threat. The British government has already made health and fitness a cornerstone of its campaign against the virus. With more people thinking about their diet, weight and general level of fitness, trackers could become more prevalent than they already are.

In fact, we’ve already seen a mini-spike in Fitbit shares since the start of 2020. Following a slight dip in mid-March, Fitbit’s share price went from $5.99 to almost $7 in April as it became clear that overweight people are more at risk of dying from COVID-19.

So, while certain businesses are suffering through the pandemic, it’s not all bad news. Pharma companies and those linked to them have a chance of getting through the crisis in a healthy position. Moreover, any companies that can pivot or align themselves with the new health-conscious trend has a chance at surviving. It’s undoubtedly a tough time for businesses right now. However, as the experts and evidence suggest, we can still recover from COVID-19.

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